Reviewing Digi International (NASDAQ:DGII) & Radcom (NASDAQ:RDCM)

Radcom (NASDAQ:RDCM) and Digi International (NASDAQ:DGII) are both small-cap computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, dividends, analyst recommendations, earnings and profitability.

Institutional and Insider Ownership

48.3% of Radcom shares are held by institutional investors. Comparatively, 95.9% of Digi International shares are held by institutional investors. 69.0% of Radcom shares are held by company insiders. Comparatively, 3.3% of Digi International shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Radcom and Digi International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Radcom	13.62%	9.61%	7.13%
Digi International	10.07%	11.00%	8.02%

Valuation and Earnings

This table compares Radcom and Digi International”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Radcom	$61.01 million	3.36	$6.97 million	$0.54	24.24
Digi International	$424.05 million	2.72	$22.50 million	$1.13	27.56

Digi International has higher revenue and earnings than Radcom. Radcom is trading at a lower price-to-earnings ratio than Digi International, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Radcom and Digi International, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Radcom	0	0	1	0	3.00
Digi International	0	2	1	0	2.33

Radcom currently has a consensus target price of $18.00, indicating a potential upside of 37.51%. Digi International has a consensus target price of $35.67, indicating a potential upside of 14.54%. Given Radcom’s stronger consensus rating and higher possible upside, research analysts clearly believe Radcom is more favorable than Digi International.

Risk & Volatility

Radcom has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500. Comparatively, Digi International has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500.

Summary

Digi International beats Radcom on 8 of the 13 factors compared between the two stocks.

About Radcom

RADCOM Ltd. provides 5G ready cloud-native, network intelligence, and service assurance solutions for telecom operators or communication service providers (CSPs). It offers RADCOM ACE, including RADCOM Service Assurance, a cloud-native, 5G-ready, and virtualized service assurance solutions, which allows telecom operators to gain end-to-end network visibility and customer experience insights across all networks; RADCOM Network Visibility, a cloud-native network packet broker and filtering solution that allows CSPs to manage network traffic at scale across multiple cloud environments, and control the visibility layer to perform analysis of select datasets; and RADCOM Network Insights, a business intelligence solution that offers insights for multiple use cases enabled by data captured and correlated through RADCOM Network Visibility and RADCOM Service Assurance. The company also provides solutions for mobile and fixed networks, such as 5G, long term evolution (LTE), voice over LTE, voice over Wifi, IP multimedia subsystem, voice over IP, and universal mobile telecommunication service. It sells its products directly to customers through executives and sales representatives, as well as through a network of distributors and resellers in North America, Asia Pacific, Latin America, Europe, the Middle East, Africa, and Israel. The company was formerly known as Big Blue Catalogue Ltd. and changed its name to RADCOM Ltd. in 1989. RADCOM Ltd. was incorporated in 1985 and is headquartered in Tel Aviv, Israel.

About Digi International

Digi International Inc. provides business and mission-critical Internet of Things (IoT) products, services, and solutions in the United States, Europe, the Middle East, Africa, and internationally. The company operates in two segments, IoT Products & Services, and IoT Solutions. It offers cellular routers for mission-critical wireless connectivity; cellular modules to embed cellular communications abilities into the products to deploy and manage intelligent and secure cellular connected products; console servers to provide secure and remote access to network equipment in data centers and at edge locations; and radio frequency products, including embedded wireless modules, off-the-shelf gateways, modems, and adapters under the Digi XBee brand. The company provides embedded system products under the Digi Connect, ConnectCore, and Rabbit brands; and infrastructure management products, comprising of serial servers, which offers serial port-to-Ethernet integration of devices into wired Ethernet networks; and universal serial bus solutions. In addition, it offers Digi Remote Manager and Lighthouse, a recurring revenue cloud-based service that provides a secure environment for customers to manage their connected device deployment and network devices; SmartSense by Digi for monitoring wirelessly the temperature of food and other perishable or sensitive goods, monitor facilities or pharmacies by tracking the completion of operating tasks by employees, as well as quality control and incident management for food service, healthcare, and transportation/logistics industries; and Ventus which provides MNaaS solutions. Further, the company provides professional services, such as site planning, implementation management, application development, and customer training; data plan subscriptions; and enhanced technical support services, as well as Digi Wireless Design Services. Digi International Inc. was incorporated in 1985 and is headquartered in Hopkins, Minnesota.